The production of crude oil by small operators provides a number of illustrations of the principles of short-run supply behavior by price-taking firm. Because price for crude oil are set in international markets, these clearly are price takers, responding to the price incentives they face. Drilers face sharply increasing marginal costs as they drill to greater depths or in less-accessible area. Hence, we should expect oil will activity to follow our model of how price-taking firms respond to price changes.